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Marginal tax rate

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Reference no: EM132544329

A firm is considering a project with an IRR of 8%. The firms cost of debt if 6%, its cost of equity is 13%, and its marginal tax rate is 23%. The firms debt ratio (D/V) in market value is 0.5, and it proportion of equity (E/V) is also 0.5. The firm should

  • reject the project regardless of the financing method
  • accept the project regardless of the financing method
  • accept the project only if it can be financed entirely with equity
  • accept the project only if it can be financed entirely with debt

Reference no: EM132544329

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